The survey found technical skills need to be developed, although 33% of employers in the sector said they have adequate capability for technical skills.

Almost two thirds (63%) of organisations said leadership and strategic skills need to be developed, particularly in the areas of people management skills and listening and only 14% had a defined coaching programme in place.

The report aimed to provide an overview of the issues affecting engineering and manufacturing in 2012/2013 and evaluated areas such as barriers to recruitment, skills gaps in the industry, employee engagement and the number of organisations with apprentice schemes in place or in development.

Organisations are moving towards more structured apprenticeship schemes to address the technical skills gap. Half of organisations currently have an apprenticeship scheme in place and a further third (32%) have a scheme in development.

Gary Wyles, MD at Festo Training and Consulting said: "It's great to see manufacturing and engineering companies engaging more with apprentices, but our leaders may not necessarily have the best skills to get the best out of them. Increasingly, young people are choosing apprenticeship schemes instead of university, as an alternative to a degree and as a result, are looking to get much more out of their apprenticeship schemes than they might have ten, twenty years ago."

Festo has worked with several organisations to help develop apprenticeship programmes and to develop leaders in their 'softer' skills such as coaching, leadership skills and communication. Gary Wyles comments: "The apprentices coming through can be very professional and have high potential. In a social media world, they are used to immediate communication and feedback and will go out of their way to seek it if it's not forthcoming. Our organisations therefore need to provide the technical skills expected of apprenticeship schemes, but also need to provide coaching and mentoring. These skills are essential as part of the apprentice experience and if they are lacking, our high potential youth are discerning and will take their potential elsewhere."